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A thriving modern economy requires certain fundamental conditions and support from key national institutions. USAID supports the Government of Jordan (GOJ) in enhancing the macroeconomic foundations for growth by improving government spending, taxation, fiscal policy and facilitating trade.
Establishing sound fiscal control in Jordan is critical to economic competitiveness. Even with considerable donor support, Jordan faces a severe budget crisis. To combat a growing budget deficit in 2010, the GOJ began an aggressive fiscal consolidation policy that included containment of the public sector wage bill, reductions in capital expenditures, and phasing out of fuel and food subsidies. However, by 2011 as the GOJ increased wages and pensions and reinstated some of the subsidies, the budget deficit began to grow, reaching almost $2 billion.
Nearly the entire GOJ budget is allocated to recurrent expenditures such as public salaries and energy subsidies. Little remains to invest in the kind of research and development, workforce development, and infrastructure needed to support globally competitive industries.
USAID has been supporting the GOJ’s fiscal reform initiatives for the last several years, helping to improve efficient use of public resources and revenue mobilization. Our current programs focus on enhancing tax and customs administration, improving public financial management, establishing tighter controls on consumption, and making better use of public-private partnerships so that the GOJ will be able to realign its budget priorities for new, productive investments in key sectors. We promote special consideration of the needs of youth, women, and communities living in poverty.
Collectively, these improvements will enhance government effectiveness, discourage corruption, improve the business environment and create the conditions necessary to attract new investments, generate jobs, spur economic growth and improve Jordanians’ standard of living.
Examples of USAID-supported impacts in public financial management include:
- Supported implementation of a new Government Financial Management Information System to increase transparency and accountability.
- Worked with Jordan’s Audit Bureau to adopt performance measures for budget development and to ensure government agencies achieve their budget targets.
- Increased tax revenue by 20 percent during the first quarter of 2012 by developing the ability of the GOJ’s Income and Sales Tax Department to collect revenue through improved bank audits and taxpayer compliance.
- Helped the Ministry of Finance develop tools and strategies to better prepare for domestic or foreign impacts to the national economy.
- Harmonized data requirements for Jordan’s customs and border agencies for greater efficiency.
- Suggested immediate actions to alleviate poverty and create jobs, assisting the GOJ in taking a proactive, fiscally responsible approach to addressing citizens’ concerns.
Last updated: January 26, 2015